Each system has a number of slabs or tax rates for individual taxpayers, depending on their annual income and age.
As the date draws closer to the presentation of the Union Budget 2022-23, all eyes are on Finance Minister Nirmala Sitharaman. Many people are eager to know if Sitharaman will announce some income tax benefits on 1 February.
The income tax system is dived into two structures at the moment- new and old taxation regimes. Each system has a number of slabs or tax rates for individual taxpayers, depending on their annual income and age.
Here is how you can calculate your income tax ahead of the Union Budget
― Visit the official website of the Income Tax department of the Union government at – https://www.incometaxindia.gov.in/
― Click on the option for tax tools that is given on the main page
― Select the option for tax calculator and enter the required details such as your residential status, net taxable income and so on
― Submit your financial details to see the Income Tax you have to pay
Direct link here.
Individual taxpayers fall under three categories- people below 60 years of age (including both non-residents and residents), resident senior citizens between the ages of 60 and 80 years and resident super senior residents who are over 80 years.
Old Tax Regime:
This structure allows individual taxpayers to avail certain deductions and exemptions. The Old Tax Regime has four slabs:
- Individuals who have an annual income of less than Rs 2.5 lakh, do not have to pay any income tax
- People whose income falls in the range of Rs 2.5 lakh to Rs 5 lakh, have to pay 5 percent income tax
- Taxpayers whose earnings are between Rs 5 lakh and Rs 10 lakh have to pay 20 percent tax on their income
- People who are earning over Rs 10 lakh, will be taxed at a rate of 30 percent
New Tax Regime:
This structure allows individuals to pay taxes lower rates, if they forego certain deductions available under Section 80C. Home loan exemptions, insurance and standard exemptions are also not applicable under this system.
- People with an annual income of up to Rs 2.5 lakh are exempted from paying income tax
- Individual taxpayers with an income of Rs 2.5-5 lakh will be taxed 5 percent on their total income
- People with earnings between Rs 5 lakh and Rs 7.5 lakh need to pay income tax amounting to 10 percent of their income
- Taxpayers with annual income between Rs 7.5 lakh to Rs 10 lakh will be taxed 15 percent on their income.
- People earning between Rs 10 lakh to Rs 12.5 lakh annually, need to pay 20 percent as income tax
- Individuals with an annual income between Rs 12.5 lakh to Rs 15 lakh will be taxed 25 percent on their income
- Finally, people who earn more than Rs 15 lakh annually will have be taxed 30 percent on their income